Earlier this week the Winston-Salem City Council approved a $100,000 loan for the Winston-Salem Chronicle newspaper. The loan raises all kinds of ethical questions for the newspaper and it also calls attention to a small business loan program administered by the city and is likely not well-known to most people. That makes for an interesting item on Yes! Weekly's blog:
The city has approved $6.1 million to 142 businesses over the past 28 years, according to information provided by Assistant City Manager Derwick Paige. Of those, 21 businesses withdrew, two are under legal action and two are pending. Alarming perhaps, only 48 remain open, while 69 are closed. The city estimates that about 491 jobs were created through the loans, which equates to about $12,398 per job…
Camino Bakery, owned by Cary Clifford, received a $24,845 loan in FY 2011-2012 and currently owes $24,384.
The city loaned Ziggy's (partially owned by YES! Weekly publisher Charles Womack) $50,000 in FY 2010-2011. The borrower currently owes $49,923.
What this piece doesn't reflect is how much interest has been paid on the loans mentioned, but if the terms are similar to the terms the Chronicle received - the newspaper would not have to begin making repayments for the first 36 months after receiving the loan. At the end of the deferment period, the Chronicle would have to make monthly payments with a 2 percent interest rate (source Winston-Salem Journal) – then it can't be much and you have to look at these and think, "Man, what a SWEET deal!"
Seriously, Ziggy's got $50,000 in 2010-11 and still owes $49,923 which means they've repaid $77 in four years. Let's hope they got the same deal as the Chronicle and have just now started to make payments and not that they're stiffing the city because they're struggling financially. Either way though, the real point here is that these loan terms appear to be amazingly generous and it's going to be interesting to see if the publicity this story has generated will prompt a flood of loan requests.
Anyone want to partner with me on my dream coffee shop-book shop-beer garden business somewhere downtown? I hear there's money to be had!